Bitcoin in Decline: Devaluation, Competitiveness, and the Challenges of the Global Economy
Bitcoin, which reached its all-time high in 2021, has been on a steady downward trajectory ever since. The asset, which once promised to revolutionize the global financial system, is now dealing with a market increasingly influenced by global economic factors that compromise its appreciation.
After reaching its peak, Bitcoin saw a significant drop in its value and, contrary to the expectations of many investors, has not managed to recover its appreciation. This scenario has frustrated those who saw the cryptocurrency as a safe store of value. But why is this happening?
Challenges in the Competitiveness of the Cryptocurrency Market
The cryptocurrency market has become a highly competitive battlefield. With the emergence of new cryptocurrencies, each offering different technologies, functionalities, and returns, investor capital has been dispersed. Coins such as Ethereum, Solana, and other blockchain networks that offer smart contracts and DeFi solutions are attracting attention and resources that were previously allocated almost exclusively to Bitcoin.
Global Economic Factors and Bitcoin's Devaluation
In addition to competitiveness, macroeconomic factors have negatively impacted the value of Bitcoin. Rising global inflation, higher interest rates, and economic uncertainty resulting from geopolitical and health crises have led investors to seek assets considered safer.
The tightening of monetary policies by central banks around the world in response to inflation has reduced the liquidity available in the market. This financial constraint has put downward pressure on the price of Bitcoin, as less capital is available to be invested in risky assets.
